With China still enjoying their National Golden Week holiday, it appears the algos are unable to maintain their normal patterns of behavior...
Instead of the ubiquitous rise in USDJPY, sparking risk-on sentiment for all to follow, tonight USDJPY is falling at the open and that means gold is up (albeit marginally)...
But it's not just JPY, all the majors are bid versus the greenback sparking a notable downdraft to the Dollar Index...
With the Trump administration lately focused mostly on domestic policy - even as Mueller's ongoing Russian probe continues to hang over Trump's head - US power and influence in the Middle East has found itself in retreat, a continuation of unsuccessful and/or failed policies implemented by the Obama administration, resulting in a power vacuum that has to be filled, and one country has emerged willing to take America's spot.
Having noted earlier the 44%, or 11-year high, in short Treasury positions among all bond traders (according to the latest JPM client survey), and a record high 70% among JPM's "active" clients, we suggested that the most likely next move in the Treasury sector is a squeeze on even the faintest news that derails the recent hawkish narrative. And, predictably if aonly for now, this morning Treasuries have ground higher, with 10-year note futures matching Asia session highs, and the yield on the 10Y sliding to session lows of 2.33%.
What about the catalyst?
It's deja vu all over again.
In a repeat of yesterday's session, where US equities and the dollar levitated in a one-way trade, Tuesday's muted session - where in addition to closed China and South Korean markets, Germany's Dax is also shut for holiday - has seen early dollar and European equity strength, while the S&P is set for new record highs amid higher E-minis and a VIX that is again lower after 5 consecutive days of declines.
The largest secession movement since Brexit and the biggest mass shooting in American history... buy stocks!!
Spain felt the pain...